MTO’s Equal Justice Work Fellow, Julie Farrell, is working with the Community Economic Development Unit of the Legal Aid Foundation of Los Angeles (LAFLA) to address the affordable housing crisis in Los Angeles. The Equal Justice Works Fellowship program brings interested law school graduates, public interest organizations and project sponsors together to develop innovative programs and initiatives that serve the various needs of underserved communities. Munger, Tolles & Olson LLP sponsored Julie’s work with the Legal Aid Foundation.

In her effort to strengthen the community, Ms. Farrell is creating a model ground lease for use by non-profit organizations for establishing community land trusts in California. Ms. Farrell has coordinated a team of volunteer attorneys, including MTO real estate attorney Jeffrey Heintz, to review the lease to ensure that the model ground lease complies with the law, maintains the trusts’ tax-exempt status and stands up to challenges.

Community land trusts ensure that affordable homes remain affordable for future generations, by selling homes and not the land those homes are built on, which home buyers must lease, to people for whom home ownership might otherwise be economically unattainable. Buyers are given the opportunity to escape the rental market, enjoy homeownership and build home equity. At the same time, the trusts hold the price of the housing outside of volatile market forces, allowing home prices to remain affordable for further generations of buyers.

Homeowners are able to build equity in their homes but not the land itself, which is a significantly smaller return on their investments. "That wealth-building goal competes with the land trust goal of maintaining affordable housing," Farrell said. "The tension is in trying to come up with a resale price that allows for a fair rate of return." Farrell states that community land trust participants can expect to make a profit on the eventual sale of their homes and such profit can be used to buy a home on the open market.

LAFLA, a law firm for low-income individuals in Los Angeles, committed to promoting access to justice, strengthening communities, combating discrimination and effecting systemic change through representation, advocacy and community education.

Jeffrey Heintz specializes in real estate transactional law, and has extensive experience and expertise in many types of sophisticated real estate transactions.